Mineral leases, prices rising in Moffat County
March 24, 2011
Moffat County Clerk and Recorder Lila Herod said her office fills up "like a swarm of bees" in the afternoon.
It has consistently for the last six months, she said.
The activity comes from the 15 to 30 landmen flooding the office each day in hopes of locating and contacting mineral owners so oil companies can negotiate mineral leases.
The companies are interested in the local section of the Niobrara geological layer, which could hold large amounts of oil, said Jeff Comstock, Moffat County Natural Resource director.
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The landmen's activity has been steady since early October, which is what Moffat County Commissioner Tom Gray said he expected.
"It's still active and it is so active, actually, that these companies are serious," he said. "The three or four that are the biggest, that are doing the most activity, they're spurring landmen from other companies to get in and compete.
"They're staying with it and they're definitely serious about doing something as far as some (exploratory) wells."
Although the interest in Moffat County minerals remains, Herod said she thinks landmen activity has dropped slightly in the last few weeks.
Comstock said there have been other changes in mineral leasing activity including lease price increases and shifts in the type of people leasing their land, which could play a factor in another recently sanctioned county mineral sale.
"My phone calls have shifted from out-of-state phone calls to the local folks," he said.
The reason for the shift in the type of mineral owners being contacted by the oil companies is because the title work is easier to locate for those who only own mineral rights, Comstock said.
"They got what I'll call the low-hanging fruit first and now they are working on the more difficult stuff," he said.
Those who own both their surface and minerals are usually local ranchers, he said, and are more able to negotiate a higher per-acre lease price with the oil companies, Comstock said.
After the county's November 2010 mineral auction, he said, the price for a lease was between $200 and $600 an acre.
Now, however, Comstock said landowners are getting anywhere from $300 to $1,000 an acre, noting the highest prices usually are only for small, fractional tracts of land.
The increase in prices, Comstock said, has him "excited" and "curious" to see the results of another recently commissioned county mineral auction.
This week, the Moffat County Commission approved a sealed bid auction on 1,055 acres of county- and museum-owned minerals.
The amount of land currently up for sale is a fraction of what was available in November 2010, when more than 13,000 acres were leased for a total of $3.38 million, Comstock said.
The minerals up for grabs, for the most part, are previously leased parcels that have recently expired. The county most likely will not have another large-scale auction like November 2010, but rather several, smaller auctions, he said.
The sealed bids will be opened at 11 a.m. Tuesday, Comstock said.
"We used to only have one company come and (museum director) Dan (Davidson) and I would negotiate the price," he said. "Now that there is more than one company interested, it's in the best interest of the taxpayers to maximize that price by doing sealed bid."
In 2010, 764 Moffat County oil and gas leases were signed between oil companies and mineral owners and filed with the clerk's office, Herod said.
Much of the activity, Comstock said, came toward the end of last year. Since the start of this year, 364 leases have been filed with the clerk's office, Herod said.
But, even after six months of leasing activity, presence of the landmen is still sizeable in Herod's office — more than she's seen since she started working at the office in 1989, she said.
A sign of that activity can be seen in the accelerated wear and tear of the county's real estate record books. Some of them are "really being torn up" and have needed to be taped and sewed back together, she said.
The county commission also approved this week to allow the clerk's office to start rebinding the books at a cost of $15,000 for 60 books. The clerk's office has about 600 books, Herod said, but the older books — some of which are about 100 years old — will be fixed first.
"(They) didn't get worn out in the last three months anyway," Gray said. "(The landmen activity) didn't help it any, but it just highlighted those books are old and we need to start rebinding them."
The price of rebinding the books is small in comparison to the benefits oil exploration could bring to the area if production occurs, Gray said.
So far, Gray said he has heard there could be about 20 exploratory wells drilled on the leased mineral acres from several different companies, including seven to 12 coming from Shell Oil.
The results of the exploratory wells could determine if high-scale production moves forward in a few years.
"Everybody is afraid to be too optimistic in case it doesn't come through, but they are having a hard time not being hopeful," Gray said.